In the recent news, the State Bank of Pakistan (SBP) has imposed another restriction on purchasing dollars from the open market as it made biometric verification compulsory for all those who would buy $500 or above from the open market.
Biometric Verification Will be Compulsory for All Foreign Currency Transactions
The step to make biometric verification compulsory on the purchase of $500 or above is being implemented to reduce the outflow of dollars from the country to Afghanistan. This outpouring is resulting in a notable rise in dollar demand in the open market and is destabilizing the exchange rate.
The central bank in a statement informed, “The exchange companies will be required to conduct biometric verification for all foreign currency sale transactions equivalent to $500 or above and outward remittances”.
The New Restriction Will be Applicable from October 22, 2021
Furthermore, the new restriction of conducting biometric verification will be applicable from October 22, 2021, SBP informed. Previously, the only condition for dollar purchase from the open market was owning a copy of the national identity card. “The condition of biometric on purchase of $500 or above will help to reduce buying from open market which is the target of the State Bank as well as the government,” said Malik Bostan, heading the Exchange Companies Association of Pakistan.
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Moreover, Pakistan’s central bank has taken other steps as well to manage the steep devaluation of the local currency against the US dollar, which is in huge demand these days. According to these measures, each person traveling to Afghanistan will be permitted to carry a maximum of $1,000 per visit, while the yearly limit would be $6000 for each person.
The Restriction is Imposed to Curb the Outflow of Foreign Currency
A circular issued by SBP informed that to improve clarity in the foreign currency transactions by exchange firms and to restrict the unwanted outpouring of cash foreign currency, the State Bank will be introducing some regulatory measures.
Meantime, exchange companies will trade the cash foreign currency and make outward transmittals, equal to $10,000 and above, against receipt of funds through cheque the or banking channels only. The SBP further stated that these regulatory measures will serve to improve documentation of the sale of foreign currency by exchange companies and place a check on undesirable outflow of international currency.